IMF's Lagarde says central banks could issue digital money

International Monetary Fund head Christine Lagarde said central banks around the world should consider issuing digital currency.

Speaking in Singapore, Ms Lagarde said this could make digital currency transactions safer.

Non-cash payments have increased over the years, raising challenges for governments and central banks.

Regulators have voiced concerns with digital currencies and called for greater oversight.

“I believe we should consider the possibility to issue digital currency,” Ms Lagarde said in a speech at a conference in Singapore. “There may be a role for the state to supply money to the digital economy.”

“The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous… And central banks would retain a sure footing in payments.”

A virtual currency issued by a central bank would be a liability of the state – as cash is – not of a private firm.

This would help consumers by making transactions safer and more common, and as a result cheaper.

“The more people you serve, the cheaper and more useful the service,” Ms Lagarde said. “Private firms may under-invest in security to the extent they do not measure the full cost to society of a payment failure.”

She added that while the case for digital currency “is not universal” it should be investigated “seriously, carefully and creatively”.

Although the technology underlying digital assets has been praised for speeding up financial transactions and reducing costs, the anonymity behind cryptocurrency trading has prompted concern among regulators.

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